Russia falls short of OPEC+ production cut target
MOSCOW (Bloomberg) -- Russia fell short of its oil-output cut under the OPEC+ deal in March even as the country deepened its curbs.
The nation’s production at the end of March was 190,000 bpd below October levels, Energy Minister Alexander Novak said in a statement on the ministry’s website on Tuesday. That’s smaller than the 228,000-bpd cut pledged in Russia’s deal with its OPEC allies.
Excluding output from production-sharing agreements -- projects including international partners such as Exxon Mobil―Russia’s output was 225,000 bpd below October by the end of March, according to the statement. That’s the first time the ministry has mentioned PSAs when assessing the size of its cut and didn’t immediately respond to questions on why its output target should be adjusted in this way.
Novak said last month that April would be the first full month this year that Russia will reach full compliance with its pledged 228,000 bpd cuts. He added Tuesday that Russia had reached “the agreed level of reductions, as planned,” by the start of April.
Pledged Cuts
Under the OPEC+ deal, Russia agreed to reduce its crude output by 228,000 bpd from its October baseline in the first quarter of this year. These were the second-biggest curbs promised within the group, following Saudi Arabia’s. Russia then said it would keep output flat through the second quarter.
Russia, one of the architects of the deal between the Organization of Petroleum Exporting Countries and its partners, accelerated the pace of cuts in March. Its average production for the whole month was 130,000 bpd below October, compared with 97,000 bbl in February, according to Energy Ministry data.
There are three projects under PSAs, which include Sakhalin-1 with Exxon Mobil as operator, Sakhalin-2 with Gazprom-led Sakhalin Energy as operator and the Khariaga oil deposit operated by Russian state oil producer Zarubezhneft.
Bloomberg calculations, based on data from the Energy Ministry’s CDU-TEK unit, show that Russia is still lagging behind its pledged curbs despite ramping up the pace. The country produced 47.8 million tons of crude and condensate in March, including output at PSA projects, according to preliminary data from the CDU-TEK. That’s equivalent to 11.298 MMbpd, down 120,000 bpd from October.
The difference may be explained by a variation in methodology, as the ministry uses an individual conversion ratio from tons to bbl for each field, whereas Bloomberg uses a unified ratio of 7.33 bbl/ton.
